Encouraging Indian farmers to avail carbon credit benefits

India recently launched the Framework for Voluntary Carbon Market in Agriculture Sector. This is with a view to encourage small and medium farmers to avail benefits of carbon credit, according to an Indian Press Information Bureau press release.

Carbon markets are systems designed to place a price on carbon emissions and create economic incentives for emission reduction, also known as ‘carbon credits’. Introducing farmers to the carbon market is expected to not only benefit them but also accelerate the adoption of environment-friendly agricultural practices. Farmers can adopt sustainable agriculture practices and get additional income from carbon credits as well as other agro-ecological benefits in terms of improved natural capital such as soil, water, biodiversity etc., according to the ministry.

Union Agriculture Minister Mr. Arjun Munda on the occasion emphasised the framework’s focus on ‘small and medium farmers’ and their crucial role in India’s agriculture and aiming to reach over 54.6% of the workforce, covering 139.3 million hectares of sown land. This aligns with the national goal of sustainable development, promoting eco-friendly practices like organic farming and agroforestry. Farmers can earn carbon credits for verifiable carbon sequestration activities, potentially creating a new revenue stream while contributing to India’s ambitious climate goals. He requested full cooperation from the concerned ministries of the Centre and states and other concerned organisations to promote carbon markets in the interest of farmers.

The agriculture ministry has therefore recently developed this framework for promoting a voluntary carbon market in India for the agricultural sector to encourage small and marginal farmers to benefit from carbon credit, as per a Financial Express (FE) report. In a first-of-its-kind initiative to incentivise for adoption of environmentally sustainable agriculture practices, smallholder farmers across eight states including Uttar Pradesh, Madhya Pradesh, Haryana, Punjab and Maharashtra would be financially rewarded with carbon credit soon, the report adds.

The FE report also points out that agri-major Bayer, Shell, Mitsubishi and GenZero who have formed ‘the Good Rice Alliance’, have decided to scale up their carbon credit programme in nine states to empower their paddy farmers for adopting smart agriculture practices — Alternate Wetting and Drying and direct-seeded rice. The programme plans to add nearly 8500 hectares. In the last one year, the project has generated around 100,000 tonnes of carbon dioxide equivalent (tCO2e) methane emission reductions annually from agriculture positively. This has impacted 10,000 farmers, covering more than 25,000 hectares in the key rice producing states – Andhra Pradesh, Bihar, Haryana, Karnataka, Odisha, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal. The farmers in the key rice growing region could earn carbon credit after adopting sustainable practices which results in reduction in greenhouse gases and improve soil carbon sequestration.

In October 2023, an investigation by Down To Earth (DTE) and the Centre for Science and Environment found several problems like the lack of robust monitoring, overestimation of emission reduction as well as lack of ownership of carbon credits, among others, with the voluntary carbon market in India. The report calls for transparency in the market, deciding clear objectives of such a market and designing rules accordingly.

According to a DTE report, carbon credits are issued for nine types of projects that either avoid greenhouse gas (GHG) emissions by allowing a switchover to clean sources or those that remove/sequester the already-emitted GHGs. Over 32% of all credits issued in the voluntary carbon market are for renewable energy. About 90 per cent of these credits are for grid-connected electricity generation from renewable sources, with wind (49%), hydropower (33%), and centralised solar (15%) being most common. Projects include methane reduction activities from paddy fields, improved irrigation. Manure methane management (78%) and rice emission reduction (17.5%) projects make up for the majority of credits issued. US and China lead in terms of credit issuance under agriculture. Focus on ecosystem-based approaches to reduce emissions and/or increase removal of GHGs from land-use activities, such as afforestation, improved forest management and wetland restoration. This category attracts the largest share of credits; most are in the US, Indonesia, Brazil and Peru. India’s lucrative carbon market is worth over $1.2 billion. It will only grow as the crisis of climate change becomes more urgent and companies strive to attain net-zero emission goals.